Momentum Technical Scoring System
Score every stock in a thematic basket to rank entries, size positions, and avoid overbought traps
The Momentum Technical Scoring System assigns points to every stock in a thematic basket based on a set of measurable trend and momentum criteria: moving average slope, RSI zone, relative performance vs. a benchmark, and volume vs. the 20-day average. Each criterion adds or withholds points, producing a composite score per name. The basket is also tracked at the aggregate level — percentage of names above the 50-day and 200-day moving averages — providing a health score for the overall theme. Highest-scoring names receive increased exposure; low scorers are trimmed or placed on alert. Updated weekly, the system aligns position sizing with technical strength rather than narrative conviction alone.
- Trending stocks in the confirmed momentum zone consistently outperform; systematize the identification rather than rely on intuition.
- RSI between 50 and 70 is the optimal zone — uptrend confirmed without overbought exhaustion risk.
- Volume confirms price; a breakout without above-average volume is suspect and should score lower.
- Basket-level health metrics reveal broad regime health and early rotation signals before individual names deteriorate.
- Composite scoring makes position sizing defensible and consistent rather than emotionally driven.
- Define and organize your thematic basket into sub-themesList every stock in your thematic watchlist and group them into logical sub-baskets such as compute hardware, optical networking, power infrastructure, and materials. A clear sub-theme structure makes scoring faster and lets you track basket health per sub-theme.Pro tipAim for 20 to 100 names. Too few and scoring adds no differentiation; too many and you cannot act meaningfully on the rankings.
- Score each stock on moving average slopeCheck whether the 1-month price slope on key moving averages — at minimum the 50-day and 200-day — is positive. Award full points for positive slope on both, partial for one, zero for neither.Pro tipUsing two timeframes distinguishes a strong persistent trend from a temporary bounce; single-MA slope scoring produces too many false positives.
- Score RSI zone and flag overbought namesAward full points for RSI between 50 and 70, partial for RSI between 40 and 50, and zero or negative for RSI above 70 (overbought) or below 40 (broken trend). This criterion prevents buying into exhausted moves even when the theme is compelling.WarningDo not buy names with RSI above 70 simply because the macro theme is strong. Wait for RSI to reset into the 50–70 zone before adding or initiating exposure.
- Score relative performance vs. a sector benchmarkCompare each name's recent return — four weeks is a practical window — against the relevant sector ETF or index. Award points for names outperforming their benchmark, deduct for underperformers. This separates leaders from laggards within the same sub-theme.Pro tipTwo names in the same sub-basket can have dramatically different relative scores. The relative score is often the single most predictive criterion for near-term continuation.
- Score volume relative to the 20-day averageCheck whether recent volume is above the 20-day average on up-moves. Elevated volume confirms institutional participation and adds points. Apply the criterion directionally — volume spikes on down days are a red flag, not a positive signal.WarningElevated volume on a down day should trigger a review of the position, not a higher score. Directional context for the volume reading is mandatory.
- Calculate basket-level health scoresAggregate across all names in the basket: calculate the percentage above the 50-day MA and the percentage above the 200-day MA. These two numbers measure the breadth of the thematic move and warn when leadership is narrowing even if a few names are making highs.Pro tipA basket where fewer than 40% of names are above their 50-day MA is sending a warning signal even if the top holdings look strong. Narrow leadership often precedes a broader reversal.
- Rank names by composite score and size positions accordinglySort all names by total composite score. Increase exposure to top-ranked names, hold steady on mid-tier, and trim or place on watchlist for bottom-ranked names. Repeat the ranking update every week before the trading week opens.Pro tipPublish the ranked list to yourself before market open each Monday so position sizing decisions are made with a clear, pre-committed framework rather than in reaction to intraday price moves.
Within the AI-infrastructure basket, optical-networking and semiconductor-packaging names scored highly on the momentum system — positive moving average slope, RSI in the 50–70 zone, and elevated relative performance vs. the SMH benchmark. The basket health score showed the majority of names still only slightly above 2024 highs, confirming the breakout was early-stage. The scoring prompted increasing exposure before both sub-categories saw what the manager described as exponential, parabolic moves higher.
After a five-week S&P selloff, the technical scoring system was run across the full thematic basket. Average RSI across the basket was well below overbought levels, and the percentage of names above their 50-day MA was still recovering — the basket health score signaled room to add, not reduce. The systematic review prevented emotional selling at the lows and confirmed re-entry timing as breadth improved.
Extracted from Jordi Visser, who built this scoring system to manage a thematic model portfolio of approximately 100 names across AI-infrastructure and energy scarcity themes.